Verizon: Free WiFi Tethering Debate is Moot

This is an update to a posting in which we originally argued “Don’t force Verizon to allow free WiFi tethering”. But now, the whole issue is moot. Let’s explore…

Over the course of the past year, Verizon has used incentives to shift most users away from an unlimited data plan to one that allows unmetered domestic calls and text messages, but charges for data based on a subscription tier. For example, if a subscriber wishes to upgrade or add a subsidized phone onto a Family Share plan, they must relinquish their unlimited data plan and switch to a fixed data plan. Data is sold in buckets with each 2GB level adding about $10/mo to the overall monthly bill. To discourage ad hoc resellers from carving up and selling individual lines within a single, retail account, the cost per 2GB block actually increases for heavily used Family Share plans.

Along with the new billing model is a notable, yet under-publicized fact: Verizon no longer charges for—or restricts—the WiFi hot spot feature of smart phones.   continue below…

Verizon Data Plans

It took us awhile to contemplate, test and vet the new tiered data plans. But in the end, we like this change in both ethos and in practice. We like it a lot, because it recognizes an unwritten fact about carriers: They are first and foremost in the business of selling bandwidth — not features or service. The new scheme benefits almost everyone. Verizon no longer fears that a customer will walk into an auditorium and offer free wireless service to strangers. In fact, carriers no longer have an interest in restricting the pipe or charging for a hardware feature. If a user wishes to let data flow at a high rate or throughout the night, Verizon simply sells a larger data plan to that user.

Incidentally, after a year of using the new plan, we find that typical users are saving money. Moreover, Verizon still allows users to keep their unlimited plan, but without offering handset subsidies when adding phones or new lines.

What’s with Verizon Billing & Customer Service?

Feb 2012 UPDATE:
Verizon billing misfeasance—just keeps getting worse

At the end of 2011, Verizon announced a bill-paying fee that would be charged even if payment is made on time and online. They did this to discourage individual monthly payments, pushing users, instead, to authorize debit from a checking account. To avoid the fee, users must grant Verizon carte blanche to dip into the till without a mechanism to authorize or restrict individual payments.

Although the proposal was not a ‘trial balloon’ (Verizon believed users wouldn’t mind paying for the privilege of paying!),  they were met with overwhelming publicity and a scathing consumer reaction. The plan was scrapped within 48 hours.

But since the article appeared, many Wild Ducks were less concerned about Verizon’s fee schedule and more interested in the billing & support problems that plague Verizon TV and Internet, especially the wholesale inability to honor FIOS bundle promotions.

Billing integrity is abhorrent. I suspect an audit of 100 customer accounts would reveal errors in the invoices or ACH debits of every one. In my own account, Verizon made scores of credit adjustments, but only after hundreds of calls & complaints. Jump directly to the relevant section.

When I launched A Wild Duck, I promised myself that this humble soap box would never be used for a personal gripe or vendetta. So let me get this out up front: This is a personal gripe. It’s not about the Verizon decision to charge customers a fee to pay their bills (a decision that they announced and then retracted after just 48 hours). Well, it’s tangentially related, but at least it’s not specifically about that loony announcement.

The ISP and wireless behemoth that Americans just love to hate is technically superior in every sector they serve. The best cell phone network in North America. The best Internet Service in the world (many of us enjoy 100Mbps FIOS service in our homes). Incredible television choices at reasonable prices. All this technology and superb technicians when there is a problem. But wait!…

They keep gushing out fodder. This time, Verizon announced a $2 fee for any customer who pays their bill. Yes! A fee to pay bills by mail or even online – unless the customer consents to pre-authorized automatic debit.

The plan lasted for about 2 days. They retracted the goofy anti-customer measure when the Federal Trade Commission announced an investigation (Hey guys. It’s stupid, but it probably isn’t illegal) and when a grass roots backlash began from every corner of the country. In fact, during the waning hours of 2011, it was more like a tidal wave.

I won’t comment further on the idea of charging customers to pay bills. It’s so whacky that it defies comment. But let me explain why users might not wish to allow Verizon to transfer payments in the absence of active client participation..


What’s up with Verizon’s Billing & Support?

  • Even after 4 years—Verizon has difficulty honoring offers & incentives
  • Renewal leads to endless billing errors & deplorable customer service
  • Verizon continues billing errors, even after agents identify the problem
  • Hundreds of calls, dozens of letters, constant apologies; Errors persist

Verizon should be permanently barred from interacting with any bank account. The amounts they debit have absolutely no bearing on the service package contracted by their clients! At least if you require them to mail invoices, you have a chance to demand corrections before payment. (But good luck. It can take literally hundreds of calls and complaints).

To make matters worse, Verizon sacked their customer support staff years ago. The remaining peons have been stripped of authority and tools. They simply cannot solve problems, no matter how egregious! (This has been acknowledged to me by numerous telephone support specialists who wish that they had mechanisms to solve serious and blatantly obvious snafus. They can’t even elevate serious billing problems).

Case Study:  Me!

I am an early adopter of direct debit payment (ACH & EFT). Since the 1980s, I have allowed a few vendors to debit my checking account for monthly services. This is how I pay for my mortgage, electric & gas bills, UPS package delivery, and other monthly services. I used to allow Verizon the same access to sweep their monthly service fee from my checking account. “Why not?” you ask. After all, It saves time, avoids late fees, and – as a diversified conglomerate – they can certainly keep their records straight. Right? Not on your life! For the past three years, I have blocked Verizon from dipping into my bank account. Instead, I use single payments for a practical reason…

Verizon has cut back on customer service to such an extent that they debit the wrong amount more frequently than the correct amount (no exaggeration!). In fact, in just 40 months, they have made more than 120 corrections to my bill and issued almost a dozen apologies. The problem is biggest with their FIOS and One Bill program (which folds in your VZ Wireless bill). They also have trouble with accurate billing for their “triple-play” bundles, especially if you choose a plan that aggregates your wireless phones.

I feel sorry for the Verizon customer who fails to regularly check their bank statement for EFT/ACH debits. With an almost complete lack of customer support, it sometimes takes legal threats (or waiting for service to be cut off) before getting Verizon to correct a litany of errors.

Why put up with such negligent customer service? It transcends misfeasance! One reason: Without question, Verizon serves up the best TV, Internet and wireless service in every market they serve. I freely acknowledge a terrific product suite. Cable TV companies and satellite services don’t even come close. Verizon never has a blackout or glitch, they replace equipment on demand, they don’t over-compress the TV signal and their FIOS speeds don’t degrade as neighbors jump on the bandwagon. In short, their “product-service” is terrific. But what about customer service?…

After 120 credits (and more than 150 phone calls to get them corrected), I finally had it! I called to disconnect service. Guess what? They lowered the price to keep my business. At first, I said “No.” I was really, really, really fed up. They didn’t just lower it once, but three times on the same call—a discount of more than $50 each month, a free DVR and a bump up to unlimited data on my smart phone. Even more surprising, they threw more senior and more professional resources at saving my business than ever offered in the past. They bent over backwards to retain my good will, and in the end, I capitulated… I accepted an outrageously grand offer.

And what happened after they created a new bundle price for me (confirmed in writing). You guessed it! The discount never stuck. Each month thereafter, I was billed the wrong amount. Did I complain? Yes. Every single month. I got profuse apologies (“up the Gazoo” as they say). Eventually, a telephone representative told me that there is simply no mechanism to automatically apply special “customer retention” offers. So she offered to apply the discount each month a few days after the regular invoice is generated. Mind you, a separate representative was manually crediting a “Triple Play” bundle discount because the company had no process for honoring a nationally advertised service packages that included wireless services.

On top of all this, their unified One Bill program was a month behind in showing credits and payments, so I never knew what to pay!

Does this method of manual intervention work? Sort of…about 1/3 of the time. The rest of the time, I must call (it takes 3 or 4 calls) and persuade the first few representatives that I am the beneficiary of a “customer retention” offer. Then, these jokers need to find the representative who made the rebate offer. Then, my call is mysteriously dropped, or – get this – a tin plated, middle manager picks up the line and tells me that the original employee acted without authority. Whoahh?! I reprint transcripts of everything and resend a few legal demand notices (8 times last year!). Eventually, the original rep calls me back. Another apology, retroactive credit, and another promise, and…

Does this sound like a company that has its act together? Is this a vendor to be trusted with the keys to your bank account? I think not, Toto! Against the advice of my own family, I have still remained a Verizon customer. Alas, it is difficult to give up terrific products (Wireless phones, TV, Internet and tethering) and of course, very significant concessions to keep my business. But I certainly wouldn’t put up with this, if it weren’t for a massive incentive: about $600 off of their discount bundle and that’s on top of advertised incentives.

Note to Verizon Stock Holders: Imagine how much more your company would earn if they didn’t have to give so much back to disgruntled customers. If I held equity in Verizon or Vodafone, I would demand an accounting of post-facto givebacks. I bet that you will find a universe of lost revenue.

Verizon Wireless: Trouble with honesty & fairness

In the market for mobile phones, a time span of 7 years represents a different era altogether. At least 4 generations of hardware feature phones have come and gone. Seven years ago, there was no iPhone and no Android. Palm was king of PDAs, a class that was still separate from phones and browsers. Feature phones offered Symbian at best. (Who remembers Windows CE?).

Way back in 2004, Verizon crippled Bluetooth in the Motorola v710, the first mobile phone to support short range wireless technology. The carrier supported Bluetooth for connecting a headset and for voice dialing, but they blocked Bluetooth from transferring photos and music between a phone and the user’s own PC. More alarmingly, they displayed a Bluetooth logo on the outside of custom Verizon packaging, even though the logo licensing stipulated that all logical and resident Bluetooth “profiles” are supported.

(Disclosure: I was a plaintiff in a class action that resulted in free phones for users affected by the deception. I am not a ‘Verizon basher’. I have been a faithful client since early cell phones and I recently defended Verizon’s right to charge for off-device tethering.)

Can you hear me now?

Why would Verizon cripple a popular feature that helps to differentiate and sell equipment? That’s an easy one. It forced users to transfer photos and music over the carrier network rather than exchange files directly with a PC. The carrier sells more minutes or costly data plans.

With the same motive, Verizon restricted feature phone apps to their Get it Now store, limiting music, games and ringtones to their own pipeline. Heck–Why not? It’s their ball park! Users can take their business to other carriers. Right? Well perhaps—but mobile service is built upon licensed spectrum, a regulated and limited commodity. Although carriers are not a monopoly in the strict sense (there are three or four carriers in populated regions), they are licensed stewards of an effective market duopoly.

Perhaps the longest lived vestige of Verizon’s stodgy funk (and the most depressing) was their insistence on stripping pre-smart phones of the manufacturer’s user GUI and foisting users to navigate a bland set of carrier-centric screens and commands. Often, I would sit next to someone on an international flight who had the same model Motorola, Samsung or Nokia phone. And guess what? His carrier didn’t interfere with fascinating user features. Why did Verizon force their own screens on unsuspecting Americans? It meant that I could not set my phone to vibrate first and then ring with increasing volume over the next few seconds. What a great feature on my Moto i810! But it was stripped from subsequent models, because it wasn’t spec’d by the boys in Verizon’s “retrofit and bastardize” lab.

With the exception of the class action on the Bluetooth features, no legislation was needed to get Verizon to unlock phone features. Eventually a free market mechanism forced them to rethink their ivory tower greed. With AT&Ts market success selling iPhones, Verizon eventually capitulated so that they could become the Android market leader. The new strategy worked for both consumers and for Verizon. Even before they began selling iPhones in 2011, Verizon reasserted their position as the carrier of choice and fully justified their cost premium through excellent coverage and quality service.

Hey, Verizon! Can you hear us now?!

But now, the company that I have learned to hate, love, and then curse, is at it again! They are about to introduce the Samsung Galaxy Nexus. It is only the 2nd Google branded Android (you can’t get closer to a pure Android experience!). But wait! News Flash: They are going to cripple a native Android feature. Just as with the Bluetooth debacle, Verizon claims that it is for the protection and safety of their own users. (Stop me, Mommy! I’m about to access a 3rd party service!).

Why doesn’t Verizon get it? Why can’t they see value in being the #1 carrier and base profit strategy on exceptional build out and service? Sure, I support their right to offer apps, music, ringtones, photo sharing, navigation, child tracking, mobile television, and even home control. These are great niches that can boost revenue. But remember that you are first and foremost a carrier. Just because you plan to enter one of these markets is no reason to cut off your own users from content and service options.

Think of this issue as your subscribers see it: Cutting off users from the Android wallet, because you plan to offer a payment mechanism of your own is no different than a phone service blocking calls to Bank of America because they are tied in with Citibank. If that metaphor doesn’t cut it, how about a simple truth? It’s been 22 years since Judge Harold Greene deregulated the telecommunications monopoly. Your company is both legacy and chief beneficiary of that landmark decision. But success is transient to those who use market penetration to restrict choice. And this time, it won’t require anti-monopoly legislation. The market will push back hard and share recovery will be slow.

I’m taking my phone and going home!

Android is open. Get it? You have flourished recently, because you chose to embrace an open system that builds on its own popularity. You have contributed to its swift ascent, and likewise, Google and your users who like Android have contributed to your success. Why spit on your users now? What did we do to deserve this?

C’mon Verizon. Stop seizing your ball and threatening to close the ball park. We love you. Get it right for once and stop dicking with us. Our patience is wearing thin!

Don’t Force Verizon to Allow Free Tethering

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This post was originally my contrarian feedback to this CNet article. But
check out this August 2013 Update: Free Tethering Debate is Now Moot
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A Dissenting Opinion — This one should go to the carriers
But first, in classic Wild Duck style, some background…

Smart phones can act as an internet modem, even without a paid plan for off-device data.

Tethering refers to the use of a mobile phone as a modem for either a directly attached PC (using a USB cable or Bluetooth connection) – or even better – by broadcasting a Wi-Fi signal to several nearby devices. They each access the Internet as if they were accessing a router in a home or restaurant.

As of Summer 2011, Verizon charges smart phone users $30 for a use of the Internet on the phone itself (the most popular mid-tier plan).* But they charge an additional $60 for the most popular Hot Spot plan, enabling the Smart Phone to broadcast Wi-Fi Internet connectivity to nearby devices. Verizon expressly forbids subscribers to use technical tricks to obtain this added functionality without paying for added feature, even if the user stays within their monthly data allowance and even though the phone has the native ability to do so.

Hackers have methods to use PCs and gaming devices through the mobile phone network, while making it appear that the data is used on phone itself. Most of these tricks require rooting the phone, a complex process that may “brick” the phone or void the warranty. (At least one Android tethering app doesn’t require rooting the phone).

A new complaint to the FCC pushes Verizon to allow free 4G tethering without added cost for the use of other devices on the carrier’s networks. The plaintiffs argue that they are paying for a fixed data allowance and that the phone they purchased from the carrier clearly includes the tethering feature. In theory, they are asking “Why should Verizon care on which device we access the Internet. Either way, we are paying for the connectivity and the overall amount of data.”

Carriers charge more for off-phone data use (a PC, camera or gaming device).

But Verizon does care! They realize that a single, palm-size device with a 4 inch screen pulls less data through overloaded towers than 5 or 10 PCs, digital cameras and even home theaters – all using the Internet at once. (Yes! Using the wireless carrier as a backhaul, a single smart phone acting as a WiFi router can provide internet connectivity for an entire home! My Droid Charge can service 10 wi-fi devices!)
Will plaintiffs succeed in a class action against Verizon? Can users force the carrier to allow tethering without a cost premium? If they do, I think that we all lose…

I can hardly be called an advocate for the carrier. Jonathan Zdziarski once led a class action against Verizon to stop them from crippling Bluetooth on the Motorola v710 phone. I was a plaintiff in that suit. We won on the basis that the phone and the packaging displayed a Bluetooth logo which conveys a certain meaning. I also played a role in persuading carriers to unlock the power of user equipment, to allow a native handset GUI, and – eventually – to allow rooting, at least with indifference.

I am a heavy data user. Although I love what Android has done to my smart phone, I prefer to use a PC with a PC OS, instead of the tiny screen on my phone. And as an acknowledged hypocrite, I will admit to occasionally using a tethering application, so that I can get Internet access on the go.

But, I am lobbying for the carriers on this one. It ain’t easy to stick a needle in my own wallet, but let’s play Devil’s Advocate for a moment. Let’s look at this from Verizon’s point of view…

Verizon smart phones are bundled with unlimited data for use on the phone itself (you could add a Bluetooth keyboard and even an HDMI monitor, but not, according to Verizon, serve up Wi-Fi to a other gadgets. That option is available for an additional fee of $60/month.

Given the wording of the license covenant, it is still possible that a judge may side with Verizon. Although the phone is designed to support tethering and Wi-Fi, it could easily be argued that these were incorporated to facilitate carrier options. After all, a tethering “app” is not an application as envisioned by the law. It isn’t a game, an email client, or a restaurant finder. It is a hack — a work around!

But let’s say that the judge interprets the restriction literally and awards the claim to the plaintiffs (presumably to all Verizon customers). If I were the carrier, this could only result in one action. Good for some phone users, but bad for most: I would change the pricing model. No longer could I offer unlimited data for phone users, because each phone can act as a mini ISP and router. It could effectively pump an entire building and all the splitters and switches within. It could service an auditorium or a trade show.

You get the point? Carriers would bill all smart phones for data by the gulp instead of the pipe. No law can prevent this. If you ship 1 FedEx package a month, you pay ‘X’. If you ship 30 packages, you pay more. In effect, we return to metered use. If you use 2GB, you get price A. If you use 8GB, price B, and more than 10G, price C. To those who use just the phone, this fight makes you the loser. You will occasionally hit the limit.

I can think of only one other alternative. Perhaps, Verizon will simply raise the price for all you can eat. But the judge may allow a discount or rebate to users who never tether their phones. This scheme could effectively bring back unlimited use in the palm of your hand, while forcing those of us who tether to pay our dues. As we should!

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